Since 2016, the average customer experience score in the U.S. has decreased to its lowest point. Two main reasons drive this decline: underinvestment in customer experience and missteps with AI.
Customer Experience Drives Customer Value
In today's competitive market, customer experience is a critical driver of customer satisfaction. Companies that excel in delivering positive experiences are more likely to retain customers, increase profitability, and enhance brand reputation. In contrast, poor customer experiences can lead to customer churn, negative word-of-mouth, and lost revenue. Yet, many companies today struggle to provide excellent customer experience.
The Decline of Customer Experience
Since 2016, Forrester has surveyed nearly 100,000 consumers across 223 brands. According to Forrester's 2024 CX Index, the average customer experience score in the U.S. has decreased to 69.3 out of 100, its lowest since 2016.
Many recent examples underscore this declining trend:
- CenterPoint Energy: Hurricane Beryl knocked out power for more than 2.2 million of CenterPoint's 2.8 million Houston-area customers, some for over a week. CenterPoint responded with inaccurate updates, delayed service restoration, with many customers unable to find out about their status.
- Australia: Australians spent nearly 100 million hours on hold during a 12-month period in 2023. Specifically, 13.3 million Australians tried to resolve issues with each customer spending 7.2 hours on hold trying to contact customer service representatives.
- AirAsia: A Malaysian airline has been losing customer trust due to eroding customer service. Customers report "long waiting times on the phone, unresponsive email communications, and inefficient handling of complaints."
Customer-focused companies need to understand the reasons driving this downward trend. There are two main reasons: underinvestment in customer experience and missteps with AI and technology.
Profits Over Customer
Many companies, often driven by a focus on short-term profitability, are hesitant to invest the necessary resources in customer experience. A Harvard Business Review article cites data from a large telecommunications company that revealed customers who rated their experience as "best" were worth 140% more in revenue than those who rated their experience as "worst."
Missteps with AI and Technology
Despite its potential to increase efficiency, the misuse or overreliance on technology and AI has negatively impacted customer experience in several ways:
- Lack of Personalization: While AI is often used to tailor customer interactions, it can fall short in capturing the nuanced needs of individuals, leading to generic or irrelevant responses.
- Inaccurate Responses: AI systems, particularly insufficiently trained chatbots, may provide incorrect, useless, or incomplete information.
- Overreliance on Automation: Companies that rely too heavily on AI-driven systems may neglect the human element essential for resolving complex or sensitive customer issues.
- Difficulty in Escalation: AI systems sometimes make it difficult for customers to sufficiently explain the complexity of their situation and escalate to a human representative.
- Lack of Empathy: AI lacks the ability to understand and respond to emotions as humans do, resulting in tone-deaf and impersonal responses.
- Data Privacy Concerns: The extensive data collection required for AI operations raises significant privacy concerns.
Conclusion: The Path Forward
To reverse the decline in customer experience, companies need to prioritize investments and humanize the processes delivering customer experience. This includes ensuring that any technological innovations, such as AI-driven solutions, are thoroughly tested and genuinely add value for customers.